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Weekly UpdatesA husband and father of three has just been admitted to a local hospital following a car wreck that pushed metal from the driver's side door into the man's left side. He is severely injured with a broken hip. The hip will need to be replaced in order to save the patient's life, the family learns from the emergency room doctor.
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As the family keeps a sharp eye on the doctors prepping for surgery on their loved one, a distribution plant in Bridgewater, Mass., takes the surgeon's order for the necessary tools and parts, and then prepares to deliver them just in time to repair what could be a life-changing injury.
According to Dave Johnson, director of distribution for orthopedic implant manufacturer DePuy Inc., this facet of emergency health care is overlooked too often.
"Distribution--I always get a kick out of this--is always an area where people take it for granted until it doesn't work," he said. "And when it doesn't work, things go haywire. It can shut down a company in seconds."
Healthy distribution
DePuy, one of the oldest manufacturers of orthopedic implants in the United States and a subsidiary of Johnson & Johnson, operates a 92,000-square-foot distribution center in Bridge-water, Mass., that ships medical supplies and devices to support more than 500,000 surgeries a year. DePuy's distribution center stores and delivers spine implants, surgical instruments, and replacement kits for knees, hips, elbows, and other parts. It also serves the shipping needs of its quartet of affiliated companies: DePuy Spine, DePuy Orthopaedics, DePuy Mitek, and Codman, as well as several outside-the-network suppliers.
Using a just-in-time output design, DePuy serves a vital role in hospital treatment and surgical care. Using automated material handling and inventory management and control software, the distribution center is capable of shipping necessary supplies on time with a promise of quality assurance. The company uses a mechanized storage and retrieval system that integrates horizontal and vertical carousels and vertical lift modules with inventory management and control software created by FastPic Systems.
Such software has found its place in other health care categories as well as other related and unrelated industries, said Doug Card, director of the Remstar-owned software company.
"We've had several medical device sites, pharmaceutical sites, and quite a few hospitals use this software," he said. "It's also been used in automotive, aerospace, semiconductor industries to restore tools, quality parts. It's pretty unlimited when it comes to warehouse or distribution applications."
With a host interface to DePuy's warehouse management system, the software uses an order processing module to manage the distribution center's workstations.
DePuy operators work three shifts daily on a six-day week, shipping an average 2,200 orders out of 14,000 active stock keeping units every day, mostly for overnight shipment. This rate of distribution is reflective of the additional role that medical supply manufacturers like DePuy play: storage house.
"Hospitals don't want to keep a lot of inventory," Johnson said. "They're always looking to cut costs, and they don't like to have a lot of costs from a space standpoint."
Three horizontal carousels are grouped together, holding 3,800 SKUs. On an evening shift, a single operator--one of more than 60 out of the 120 total employees at the Bridge-water site--pulls outbound orders from the system. Within four hours each night, a lone carousel operator can pull 500 orders. Before the addition of the carousels, an area Johnson said he is concentrated on improving, it took five operators to match the same picking number.
During the day shift, another 150 so-called "emergency" orders are pulled from the horizontal carousels. A vertical lift module holds about 2,000 sets composed of DePuy spine implants and surgical instrument parts, while two more vertical carousels are used for product segregation and labeling.
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Johnson said the picking accuracy is well over 99.9 percent, allowing the distribution center to meet daily demands consistently. And errors are statistically minor. Johnson said that within a 12-month period ended in 2006, there were 50 complaints among 1.7 million shipped products. "Some people don't complain or have an invalid argument that is the fault of customer service rather than us [in the distribution center]," he said.
Responding to a changed industry
The distribution center's JIT approach is born out of the need to meet demands that evolve from the many variables that keep emergency rooms and hospitals busy around the clock. Johnson said that JIT creates a "confidence" to handle as many orders as required to service 10,000 hospitals nationwide, "because you never know when the next auto accident will be."
The use of a distribution center within the arthroplasty industry, Johnson said, is part of a culture change that has pushed the relegation of orthopedic implants away from hospitals and into the manufacturing community: "The arthroplasty business is pretty much a new business, albeit it's been around for only 20 or 30 years. It's evolved, and the industry has set the tone with the customer by saying 'We'll consign inventory to the hospitals to get the business.'
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"Now you have that consignment inventory to the hospitals to get the business.... You use it, you have to replace it so that consignment can be good again."
Johnson, who has been with DePuy for 30 years, said that hospitals used to buy bulk inventory but few still do that today despite the growing number of hospitals that provide orthopedic surgery options. That expansion, though, also feeds the need for JIT replenishment.
"Instead of having it [orthopedic surgery] done in Boston, New York, or Philadelphia, you now see these types of surgeries being done in all of the regional and local hospitals," he said.
It's also part of the logistics behind DePuy centering its distribution in Bridgewater, Mass., which is surrounded by medical supply manufacturers throughout the northeastern United States. "Obviously, you want to eliminate as much handling as possible," Johnson said.
Another element incorporated into the site's logistics includes forecasting order input versus capacity. Johnson said that knowing how much inventory the carousels and modules can handle plays a major role in avoiding delayed delivery or lost time, which can mean doom in medical emergency scenarios. He also said the distribution center's capacity is usually well above the highest number of orders or "hits"--an analysis that is routinely measured.
"There are spikes, but the system is able to track what we need," Johnson said. "We know a lot of our orders come in during the afternoon, giving us a short period of time to pick them.... We know on the carousel how many hits an hour we can average, then--based on our forecast--we look at what the worst case [scenario] is."
Card said he was doubtful of any ceilings in DePuy's throughput estimates. "I can't imagine they're having a problem with that."
Quality counts
Quality also is a priority at the DePuy site. First and foremost, the plant must receive approval following inspections by the U.S. Food and Drug Administration as well as certification by the International Organization for Standardization. The JIT approach also encourages quality control through the automated carousel system, which Johnson said helps eliminate guesswork by the operator.
"When the order comes down for a particular [stock] code, the software in the carousel will know the oldest lot in the system, then automatically indexes that," he said. "It's better than doing it manually because the human error is almost eliminated. As long as the product is put away correctly, the chances of picking it correctly are very high."
But like Johnson, Card doesn't believe the automation should be relied on 100 percent, which would pose a risk to product and delivery quality.
"If they want to control allocation, they can do that," Card said. "It can be fully automated or user-controlled at any level they want."
Card believes that the use of inventory management and quality control software has a lot of potential in the health care industry, particularly when examining its possibilities among hospitals, clinics, and medical suppliers.
According to the company's Web site, DePuy aims to continue advancements in orthopedic materials design, manufacturing, and distribution. Products currently in development include imaging technology that will allow surgeons to see bony anatomy through the skin, integration of heads-up display into the surgical face shield, and advanced cutting tools and surgical instruments.
Even with the addition of these in-house technology advancements, Johnson does not expect to see a change from the distribution center's JIT approach. Throughout each day, he said that personnel are aware of the service they provide as well as the mortality that rests on their output rates, inventory management, and quality control. They acknowledge the importance of getting it right the first time around, regardless of automation.
"I tell our associates that an error on their part can cause serious injury or death. If some child is waiting for a shunt and we send the wrong shunt when the doctor's ready to operate--and it's because someone made a picking error, that could be life threatening. Obviously, people take the quality we provide for granted because we have a very high rate of quality."
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